Capitol Insights Newsletter

Authors: Luke Schwartz & Matt Reiter

What happened in Congress this week?

On May 23rd, the House Ways and Means (W&M) Committee’s Health Subcommittee held a hearing titled The Collapse of Private Practice: Examining the Challenges Facing Independent Medicine. As the title suggests, this hearing explored challenges facing independent medical practices, focusing on financial and administrative burdens to keeping independent practices both independent and open.

On Thursday the Senate Appropriations Committee held a hearing to review the President’s Fiscal Year 2025 Budget Request for the National Institutes of Health (NIH), which proposed $50.1 billion for NIH Institutes, Centers, and Offices. Discussions at the hearing centered around senators’ state priorities and NIH objectives for the year, including advancing the Cancer Moonshot Initiative, leveraging precision medicine for mental health, advancing women’s health research, addressing Long Covid, promoting data sharing in research, fortifying biodefense, and improving research centers. The leaders of the committee agreed more NIH funding was necessary.

Additionally, on Thursday the House Budget Committee held the hearing “Breaking Up Health Care Monopolies: Examining the Budgetary Effects of Consolidation.” This hearing discussed the high spending within the US healthcare system compared to other countries and cited healthcare consolidation as a major cause. The Members and witnesses agreed that healthcare consolidation tends to raise costs without improving the quality of care.

Senate Finance Committee Releases White Paper on
Medicare Payment Reform

The Senate Finance Committee has released a white paper titled “Bolstering Chronic Care through Physician Payment: Current Challenges and Policy Options in Medicare Part B”. This paper comes at the heels of the April 11th hearing “Bolstering Chronic Care through Medicare Physician Reimbursement” and furthers many of the topics discussed during the hearing. While the paper does not make specific policy recommendations, it explains the policy issues the Committee has identified and its views on possible solutions to these issues.

This robust paper begins by exploring the background of the Medicare Physician Fee Schedule (PFS), including an overview of the PFS, its rate-setting methodology, the relative value units (RVUs) system, and the PFS conversion factor (CF). It successfully integrates the various factors influencing physician reimbursement and sets the stage for exploring future changes in how providers are compensated for treating chronic conditions.

The main portion of the white paper looks ahead to the policy challenges in treating chronic conditions and explores potential reforms to address these hurdles. It lists questions related to a wide range of policy proposals under consideration, which fall into several main categories:

  • Alternative Payment Models – The white paper points towards more effectively incentivizing participation in alternative payment models and rethinking MIPS and its associated burdensome reporting requirements.
  • Improving Primary and Chronic Care – This includes ideas to more effectively manage chronic conditions in the primary care setting. One proposal being considered is creating a hybrid payment model in FFS that would allow for a per-beneficiary, per-month (PBPM) payment provided in advance to independent primary care physicians. According to the paper, this would reduce administrative burden while more appropriately compensating primary care.
  • Telehealth – The white paper discusses the importance of ensuring Medicare beneficiaries have continued access to telehealth. Congress is expected to extend Covid-era telehealth guidance for two years later this year.
  • Changes to the calculation of the Medicare Physician Fee Schedule (PFS) Conversion Factor (CF) – The white paper discusses ideas such as more closely monitoring CF fluctuations and constraints, addressing payment update adequacy and sustainability, and the struggles of being limited to budget neutral adjustments to the CF.

Changes to the CF is a particular area with lots of room for change. Physician reimbursement is being substantially outpaced by inflation and according to the paper, there is a risk that more physicians will stop accepting Medicare in the near future. Many stakeholders have proposed an adjustment schedule for the PFS payments that accounts for shifts in cost inputs over time. Furthermore, there is limited flexibility to increase the CF due to budget neutrality. As the paper explains:

The PFS statute requires CMS to make budget neutrality adjustments for policy updates that the agency’s actuaries project will result in outlay changes exceeding a statutory threshold of $20 million in a calendar year. Congress has never increased this threshold, which receives no automatic updates under current law.”

The paper also describes challenges to increasing Medicare payments. In addition to the cost to the government, increasing Medicare reimbursements to physicians will also increase beneficiary cost-sharing amounts. Cost considerations will make it more difficult for Congress to embrace large reimbursement increases to physicians. 

Overall, this paper is the most comprehensive outline of Medicare reimbursement reforms to come from a Congressional Committee in many years. It is not yet clear if any of these recommendations will be included in legislation that is considered by the Senate this year.

Top Stories in Healthcare Policy

Many nursing facilities will likely be eligible for exemption from the HHS’s new nursing home staffing requirements. However, there’s concern that numerous nursing facilities in need of exemptions may not receive them, potentially leading to downsizing or closures.

HHS will send more than $50 million to hospitals to improve their cybersecurity in an effort to prevent future cyberattacks.

Former NIH official Martin Mendoza will become the director of the CMS Office of Minority Health.

Last week in the Senate Health, Education, Labor & Pension (HELP) Committee hearing on the cost of dental care, experts aimed to persuade Congress that dental coverage should be a part of Medicare and Medicaid.

Colorado has signed the country’s first comprehensive state-level Artificial Intelligence (AI) regulation into law. This law will impact the use of AI in healthcare as well. Other states could follow Colorado’s lead.

 Providers are asking HHS to be exempt from HIPAA breach notification requirements resulting from the massive cyberattack on Change Healthcare that impacted roughly one-third of people in the United States.

Senate Finance Committee Chair Ron Wyden (D-OR) released a letter asking CMS to crack down on fraudulent health plan changes. Specifically, the letter asks CMS to enforce penalties for agents and brokers who enroll people into Affordable Care Act (ACA) plans or switch plans without beneficiary consent.

The Federal Trade Commission (FTC) is hosting a webinar on its final rule banning noncompete agreements on May 31st at 1 p.m. Eastern Time. The webinar will specifically focus on the final rule’s impact on the healthcare industry.